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The Blockade of 
Soviet Russia 



I. Official Documents 

11. Statements 

III. Editorial Comments 

IV. Articles 



NEW YORK 

The Committee for the 

Regeneration o/" Russia 

1920 






I 



Foreword 

The object of this booklet is to gather under one cover 
some of the official documents concerning the recent 
action of the Supreme Council in Paris in partially lift- 
ing the blockade of Soviet Russia, as well as different 
opinions upon this action, both for and against it. 

The position of the Committee for the Regeneration 
of Russia is made perfectly clear in its official state- 
ment, published in this booklet. 

The opinions gathered here bring out, we believe, the 
following points : 

1. That the co-operative unions, through which the 
Supreme Council expects to conduct trade, are under 
the control of the Soviet Government. This is asserted 
by the anti-Bolshevik elements, and admitted by both 
the representatives of the Bolsheviki and those of the 
Co-operatives. 

2. That trade dealings with the Co-operatives would 
be equivalent to trading with the Soviet Government 
and, therefore, strengthening its strangle-hold on the 
people of Russia. 

3. That in any event trade with Russia is" impossible 
on anything like an adequate scale, because of lack of 
credits, of raw materials for export, and because of the 
general disorganization of the country. 

4. That the alleviation of Russia's fearful condition 
will not be possible until Russia has a truly representa- 
tive government, capable of organizing the political and 
economic life of the country. 

The Committee for the Regeneration of Russia. 



CONTENTS 



1. Text of the Announcement of the Supreme Council 



Page 

7 



II. 



Note of the Supreme Council 



III. Statements of 

1. Committee for the Regeneration of Russia 

2. The Russian Embassy .... 

3. V. N. Bashkiroff 

4. Russian Economic League .... 

5. The American-Russian Chamber of Commerce 

6. I. G. Znamensky ..... 

7. J. OkuHtch 

8. A. Berkenheim ...... 

9. M. Litvinoff 

10. Russian Soviet Government Bureau 

11. Santeri Nuorteva ...... 

12. C. Krovopouskov . . . 

13. C. Morosof¥ 

14. Dr. I. J. Sherman 

15. Alexander Zelenko ..... 

16. Herbert Hoover . . . 

17. Dr. E. E. Pratt 

18. American Defense Society 

IV. Editorial Comments 

1. New York Times ...... 

2. Philadelphia Public Ledger 

3. New York Tribune ..... 

4. New York World 

5. N. Y. Evening Post 

6. Boston Evening Transcript .... 



V. Articles 



L Trading with Russia, by Jerome Landheld 
2. Lifting the Blockade, by Leo Pasvolsky 



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35 

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Text of the Announcement by the 

Supreme Council in Paris Concerning 

the Lifting of the Blockade. 

Issued by the State Department, on January 16, 1920. 

With a view of remedying the unhappy situation of 
the population in the interior of Russia, which is now 
deprived of all manufactured products from outside of 
Russia, the Supreme Council, after taking note of the 
report of a committee appointed to consider the re- 
opening of certain trade relations with the Russian peo- 
ple, has decided that it would permit the exchange of 
goods on the basis of reciprocity between the Russian 
people and allied and neutral countries. 

For this purpose it decided to give facilities to the 
Russian Co-operative organizations which are in direct 
touch throughout Russia, so that they may arrange for 
the import into Russia of clothing, medicines, agricul- 
tural machinery and the other necessaries of which the 
Russian people are in sore need, in exchange for grain, 
flax, etc., of which there is a surplus supply. 

These arrangements imply no change in the policies of 
the allied governments toward the Soviet government. 



Supreme Council's Note to the Repre- 
sentatives of the Russian Central 
Co-Operative Union. 

First. — The allied governments notify the Co-opera- 
tive Union that they are disposed to authorize an ex- 
change of products upon a basis of reciprocity between 
the Russian people and the allied and neutral countries, 
and they invite this Union to export from Russia the 
surplus of its cereals, its foodstuffs and its raw materials 
with a view to exchanging them for clothing and other 
merchandise, of which Russia is in need. 

It should be well understood that the value of the mer- 
chandise, the importation of which into Russia will be 
authorized, will be based on the value of the merchan- 
dise exported from Russia within a reasonable period. 

Second. — The Russian delegation at Paris will com- 
municate immediately by wireless with the controlling 
committee at Moscow and will ask if the Co-operatives 
are ready to assume responsibility for handling these 
importations and these exportations, and if exchanges 
of this sort are practically possible. The respresenta- 
tives of the Co-operatives at Moscow will determine im- 
mediately these questions. 

Third. — The Central Committee at Moscow will 
guarantee that the exportation of cereals,^ flax, etc., shall 
be authorized and that the necessary transporations fa- 
cilities shall be furnished. 

Fourth. — As soon as certainty is reached in this mat- 
ter the Central Committee at Moscow will inform Berk- 
enheim (Alexander Berkenheim, Vice-President of the 
All-Russian Union of Consumers' Societies) at Paris. 

Fifth.- — The Co-operative Unions in foreign countries 
will then take measure to furnish Russian cereals and 
flax on condition that the Co-operatives shall be ad- 
vanced 25 per cent of the value of the exports, either by 
direct contact or by British, French or Italian financiers. 



Sixth. — The balance of necessary credits will be fur- 
nished in London or Paris by Russian resources or Brit- 
ish, French or Italian Co-operatives, private banks or 
traders. 

Seventh. — Goods purchased by the above crdits will 
be loaded immediately in Black Sea or Baltic ports, 
risks of loss or conflagration being assumed by the Rus- 
sian Co-operatives. 

Eighth. — The Central Committee at Moscow will en- 
deavor to supply at least four complete trains for the 
transportation of goods to and from the Black Sea ports. 
Should Moscow not succeed, the Co-operatives in for- 
eign countries will employ part of the credits for the 
purchase of freight cars and locomotives in the allied 
countries. In any case, they will send motor trucks in 
order to help railroad transportation. 

Ninth. — As soon as the exportation of cereals, flax 
and other raw material from Russia has commenced 
effectively, the contracts referred to above will be con- 
siderably increased in order, for instance, to reach a 
million tons of cereals, which would be the quantity 
available for export, in a little longer time. 



Committee for the Regeneration 
of Russia. 

{Statement.) 

The Committee for the Regeneration of Russia, having discussed 
the question of the raising of the blockade of Soviet Russia and of 
the possibility of importing into Russia manufactured goods through 
the Co-operative Societies, has come to the following conclusions : 

Fiist. — The economic catastrophe and the starvation of Soviet 
Russia are the direct consequences of the two years of civil war, 
which was proclaimed by the Bolsheviki as the basis of their whole 
military and economic policy and tactics, and which is really the 
basis of the dictatorship of the Communistic party in Russia and the 
introduction of the Socialistic regime through violence. 

Second. — This catastrophic condition can be helped only by a 
direct participation of the whole people in the life of the state, for 
which the people must have full right to dispose of the products of 
its toil in a free manner and unhampered by any class system; the 
civil war must cease ; the local municipal and Zemstvo organs of 
self-government must be re-established as the foundation of the 
future Russian state, system of government, and national economy. 

Third. — Since there exists a complete breakdown of the railroad 
s_vstem and of other methods of transportation, -as well as a cruel 
governmental system of requisitions of rural agricultural products by 
the Bolsheviki for use in the cities and at the military fronts, there 
are no guarantees that the goods intended for the villages, and for 
the starving civil population, will ever reach their destination, while 
on the other hand the goods intended for export will ever reach 
the seaports. 

Fourth. — The Russian Co-operative Societies do not represent an 
independent economic organization in Soviet Russia, but are a relatively 
small institution under the full control of the Soviet Government. 

Fifth. — The military struggle against the Bolsheviki still continues 
on all the fronts, and the Bolsheviki themselves are not full masters 
of the situation even on the territory of Central Russia, the best proof 
of which fact lies in the peasant uprisings, which still continue. 

10 



Sixth. — Taking all these factors into consideration, the Committee 
considers that, in view of the existing internal conditions in Russia, 
the desires expressed in the declaration of the Supreme Council con- 
cerning the resumption of trade with Russia and the rendering of 
assistance to the suffering population of Russia are impossible of 
realization, and considers also that the act of the lifting of the blockade 
of itself does not constitute a solution of the Russian problem; but, on 
the contrary, complicates this problem by causing a prolongation of 
the period of Bolshevik domination in Russia and a, further disorganiza- 
tion of Russia's productive forces, and consequently renders still more 
necessary assistance on the part of the allied powers to the democratic 
elements of the Russian people, who still continue their struggle for 
the regeneration of free Russia. 

Neiu York, January 27, 1920. 



The Russian Embassy 

{Washington) 

At the Russian Embassy here the plan meets with unhesitating con- 
demnation as one certain to disappoint the purposes of its sponsors, 
which are understood to contemplate the strengthening of the better 
elements in Russia to a point where they can throw off the control 
of the Lenine-Trotsky regime. Embassy officials assert that the Soviet 
Government, certainly well informed of the conditions in Russia and 
the extent of its own power, never v\'Ould knowingly acquiesce in the 
execution of any project that M^ould sap its authority and bring about 
its overthrow. But in full control of all of the co-operative societies 
which it is proposed to use as a means of placing the imported supplies 
in the hands of the Russian people, the Soviets, it is said, surely will 
make certain the distribution of the supplies to its own supporters alone. 

Further, it is stated at the Embassy that the moral encouragement 
that would be given to the Soviet Government by this patent evidence 
of recognition by its former enemies would completely discourage the 
efforts of the remaining loyal Russians to restore and rehabilitate 
domestic government in Russia. It would be regarded by these 
Russians, it was added, as a measure dictated not by strength, but 
by despair. 

Asserting that it could be executed only by co-operation between 
the Entente powers and the Soviet Government, Russian Embassy 
officials say it would amount to a full recognition of that government, 
which so far has been avoided by the Entente. Acceptance by the 
Entente of gold in payment for goods sent into Russia, it was said, 
would carry with it political recognition. For it is pointed out that 
to receive gold from any but an authorized government would be 

11 



unlawful and would make the parties subject later on to reclama- 
tions by the real all-Russian government, which regards this gold as 
a national fund and possession. 

Finally, it is held that the danger from a military point of view 
of invasion of the west by the Soviet armies, probably able to muster 
a million rifles, if assisted in the way suggested with supplies, which 
are certain to be given first to the soldiery, would be increased rather 
than diminished, and a people's army would be created that would 
menace the safety of all of the neighboring states. — Journal of 
Com7nercej January 20, 1920. 



V. N. Bashkiroff 

Chai?-man of the American Co?nmittee of Siberian Agricultural 
Co-operative Unions 

{Statement) 

First. — The whole problem of the blockade on Soviet Russia is 
nothing more than an optical illusion. The population of the Bol- 
shevist territories suffered, and is suffering, not so much from the Allied 
blockade as from the Soviet internal blockade, imposed on the people 
in the shape of a monstrous system of political and economic oppres- 
sion, which is the Soviet substitute for their complete inability to 
build the economic life of the country on a rational basis. 

Second. — The likelihood of improving economic and living condi- 
tions in Soviet Russia by means of cemmerce and trade through the 
Co-operative Societies there is practically nil. The Co-operative 
Societies in Soviet Russia scarcely exist now as independent bodies, 
and at present represent onl)^ a part of the Soviet supply and dis- 
tribution system. 

The Co-operatives, like everything else in Russia, are operating 
under the control and in conformity with the rules laid down by the 
provincial and regional Soviets. To conduct, therefore, trade and 

commerce through the Co-operative Societies would be possible only 
under the condition that the economic and administrative mechanism 
of the Russian Co-operatives is re-established and given full inde- 
pendence, and a full contact is established between the Co-operatives 
and the population. It is clear that those conditions are unacceptable 
to the Bolsheviks, because their policy of supply and distribution is 
based on class and oligarchical principles, while the Co-operative 
Societies are non-political and non-class organizations. 

Third. — The chief producer and consumer of Russia is the peasant. 
The peasants, as a body, are non-Bolshevik, and are stubbornly op- 
posing all the Bolshevist plans and undertakings. The political con- 

12 



nection between the Bolsheviks and the peasants came to an end 
when the Russian armies were demobilized and the estates of the 
former landlords were seized by the peasants. At the same time the 
connection between the village and the city was also severed, owing 
to the fact that the city ceased to produce anything of value for the ■ 
village. The question, therefore, arises: How can an equivalent 
commercial compensation be obtained by the Allies in exchange for 
the goods they are to supply Russia? 

A small part of what the Bolsheviks needed to provide for the city 
population was squeezed out from the villa'ge by means of incessant 
requisitions and confiscations, through sheer military terror and semi- 
military activities of specially armed foraging detachments made up 
of city workingmen. This is the only way in which the Bolsheviks 
can deal with that problem in Russia. Do the Allies really wish to see 
their goods — clothing, medical supplies and machinery — once more 
reach the Russian village through military pressure? 

Fourth. — Russian cities are unable to export any goods because they 
have none to export. The Russian village has a great deal of grain 
and agricultural raw products, but the Russian peasant will be 
willing" to give a part of that only when the foreign goods needed 
by him shall have actually reached the village — i.e., when every izb"ah 
(peasant house) shall receive its share of goods. In order to accom- 
plish this it is necessary first that the peasants be able to dispose 
freely of their goods without Bolshevik interference; and, second, that 
the goods shall actually reach them. Transportation in Russia is 
utterly disorganized. There is practically no rolling stock, no fuel, 
and no river steamers. Paved roads are in an impossible state, and 
the rate of mortality among horses is very high. By what means, 
then, is it expected that, on the one hand, the foreign goods shall 
reach the Russian peasant and, on the other hand, the Russian raw 
material shall be sent abroad? 

This is indeed the beginning a new civil war more terrible than 
the present one. It matters not what efforts may be made by the 
Co-operative, for the simple reason that they have neither means of 
transportation, nor roads, nor administrative power. Therefore, trade 
in Soviet Russia will assume the form of the Bolsheviks extorting raw 
materials from the peasants at the point of the bajonet, and instead 
of being a form of economic creative work, it will become but a new 
method of oppression and extortion. 

Fifth. — -Once the decision of the Supreme Council is put into 
operation, we feel confident the near future will prove that sound 
organizing capital has no place under Bolshevik rule. Under existing 
conditions only speculative capital, gambling on enormous protits, will 
venture to go to Russia. This, in its turn, will accelerate the further 
impoverishment of the people and the reckless squandering of the 
natural resources of Russia. 

Ultimately the exasperated peasantry will fall upon the cities and 
literally wipe out the last remnants of civilization in Russia. 

13 



Russian Economic League 

{State?tient) 

The man}' inquiries concerning trade relations with Russia received 
by the Russian Economic League • since the announcement of the 
Supreme Council at Paris concerning the lifting of the blockade have 
caused it to issue the following statement: 

As the Russian Economic League is concerned onlj' with economic 
affairs and the development of Russian-American business relations, 
it is not within its province to discuss the political significance of the 
announcement with reference to the blockade. 

The blockade was a purel}' military' measure, the effectiveness of 
which as carried out has alwaj's been in question, and the Russian 
Economic League would welcome the lifting of the blockade at any 
time under conditions and safeguards that would ameliorate the con- 
dition of the Russian people, and not serve merely to strengthen the 
minority which is oppressing them. 

The League deems it proper to warn American business men against 
exaggerated hopes of commerce with Russia as a result of the an- 
nouncement of the Supreme Council, believing that no sound basis 
can be laid for commercial relations without the restoration in Russia 
of the institution of private property and the recognition of the rights 
of the individual. 

Practically there has been no blockade from the outside of Russia 
so effective as the blockade exercised by the Soviet Government itself 
within Russia, by the so-called nationalization of trade, by its absolute 
control of food supplies, and by its incompetence to deal with the 
problems of transportation and industrial production. 

While the Russian Economic League will welcome every step that 
can possibly lead to saving the population of the Russian cities from 
starvation and to supplying the peasants of Russia with the goods 
they so sorely need, it is unwise to expect that such ends will be 
attained by the proposal just announced by the Supreme Council 
at Paris. 

New York, January 22, 1920. 



14 



The American-Russian Chamber 
of Commerce 

{State'ment) 

The American-Russian Chamber of Commerce, representing a large 
number of influencial American business firms, through its Executive 
Committee, at a special meeting held todaj'', issued the following 
statement in regard to the recent action of the Supreme Council at 
Paris relative to the partial lifting of the so-called blockade of Russia: 

The recent announcement of the Supreme Council at Paris regard- 
ing the removal of the so-called blockade of Russia has already led 
to considerable misunderstanding. It is important that the public 
should understand clearly how far a change of policy has been, 
adopted and what may be expected from such a change. 

In the first place, there has been no change of policy on the part 
of the Entente Powers toward Soviet Russia which involves any 
change of principle. The onh^ change is one of tactics. The an- 
nouncement from Paris states in categorical terms that there will be 
no change in relations of the Powers to the Soviet Government. There 
will be no "recognition" of the Soviet Government, no direct dealings 
with it. It is proposed only to allow an exchange of goods between 
the Russian people and the outside world, and this primarily through 
the agency of the Russian Co-operative Societies. 

The object of the proposed program is partly to relieve the distress 
among the non-combatant population of Russia, and partly, by per- 
mitting a distribution of supplies to the non-Bolshevik elements, to 
weaken the Bolshevik .domination over the masses. Regarding the 
practicability of this program there is difference of opinion. Mr. 
Hoover has said that" he believes it will help in some measure to 
strengthen the elements opposed to Bolshevism by exposing its failure. 
In any case, we shall now be able to test the arguments of those 
who have maintained that the blockade has proved not only a harsh 
policy, but a stupid one. Such people have said that by maintaining 
the blockade the Powers have merely given to the Bolshevik oppres- 
sors the opportunity to throw all blame for their failure and the 
consequent sufferings of the Russian people on the Allied governments. 

While it is to be hoped that this may be the effect of lifting the 
blockade, unfortunately the chances for it seem to be very slight. It 
is to be feared that the Bolshevik Government will point to thi& 
action as a concession extorted by the triumph of their arms, and will 
be stimulated to make more stringent military aggressioiis both east 
and west. Furthermore, the Bolshevik rulers are shrewd judges of 
their own interests. We may be sure that if they welcome this 

15 



program it is because they are convinced that they can turn it to their 
own advantage. If they think there is any likelihood of their op- 
ponents becoming strengthened thereby they will not permit the Co- 
operative Societies to participate in this program. 

In any case, absurdly exaggerated notions prevail in some quarters 
regarding the possibility of trade with Russia at the present time. 

In the first place, the exporter may as well put out of his mind 
the much-advertised Bolshevik proposal to pay in gold. 

In the second place, it is obviously impossible for any Russian 
organization, situated in Russia, to receive extensive credits at the 
present time. Consequently, the only means of payment consists in 
such raw materials as are accumulated at Russian points, and which 
may be exported in exchange for manufactured goods imported. 

It is clear then that the announcement makes no change of real 
importance either politically or economically. The Russian problem 
still confronts us as before. We should not believe for a moment that 
the solution has been found. There is and can be but one solution. 
That solution lies in the establishment of a legitimate form of 
government, stable and responsible, and, as far as Russian conditions 
'^ermit, representative of the interests and will of all the Russian 
people. With this accomplished will follow the restoration of Russia 
as a productive unit in the family of nations. She can never be 
supported from the outside. Her restoration as a producer is essen- 
tial to the prosperity of the world, including America. It can only 
be accomplished by the overthrow of the forces of destruction which 
now have her in their grip. The American people will soon wake up 
to the fact that no economic stability in the world is possible until the 
forces of law, order and property are restored in Russia, and that the 
present is no time to abate by one jot or tittle all efforts to bring 
about this consummation. 

There is today a life and death struggle between civilization and 
Bolshevism, and in this struggle there can be no €ompromise. 

It is essential that we state clearly that there shall be no recognition 
of or collaboration with the destructive tyranny that rules in Moscow; 
that we stand for a unified, independent and democratic Russia, and 
that we stand ready to co-operate with and extend aid to all the 
constructive elements of the Russian population in their struggle to 
free themselves from the grip of their oppressors and to reconstruct 
their national life and prosperity. 

Further, we believe that America should take the leading part in 
such a definite and constructive program. 

New York, January 20, 1920. 



16 



I. G. Znamensky 



The aim of lifting the blockade is to give assistance to the suffering 
population of Russia and it is precisely this aim, in my opinion, that 
cannot be attained. The lifting of the blockade under present condi- 
tions will not help the population of Russia but will be only of assistance 
to the Bolshevik Government. 

No well-established commercial relations with Soviet Russia could be 
possible. First, it will be difficult to find reliable firms which would be 
able to trade in Russia. There are no private banks now and all the old 
firms there are ruined or have simply disappeared. Thus there is no 
commercial apparatus at present in Soviet Russia. 

The commercial relations w^ith the Co-operative societies is also im- 
possible as the Co-operative societies have no independence whatever. 
The Bolsheviki control them. 

No credit transactions are possible. The Russian paper rouble has 
no value whatever; there thus remains barter for the Russian raw ma- 
terials. 

But raw materials however are very scarce in Russia. Under the 
Bolshevik regime production has dropped to the minimum, and most 
materials produced by Russia were used by the nation itself. The 
only raw products that might be found are in the hands of the peasants. 
The Co-operatives as such have nothing. Thus they will have, as any 
other organization, to collect the raw materials from the peasants. 
Nothing had been collected for the last two years. The peasants will 
give up their raw materials only in exchange of merchandise, but the 
latter cannot under the present conditions " reach the peasants on ac- 
count of the utter breakdown of transportation. What is left of the 
railroad transportation is entirely taken up by the needs of the Bol- 
shevik Red Army and could not be used for commercial interests. 

Every attempt to gather the raw materials from the peasants by 
force will certainly fail. The Bolsheviki have tried it several times and 
invariably failed. There might possibly be some limited commercial 
transactons based on gold which is in the possession of the Bolshevik 
Government and partly belongs to Russia, partly to Roumania. We 
doubt, however, if any of this gold will be given up by the Bolshevik 
to the foreign commercial firms. 

To establish commercial relations with the Bolsheviki would mean 
helping the further destruction and disorganization of Russia. It 
would mean helping the enemy of the civilized world. The future 
commercial relations with Russia can be established only after the fall 
of the Bolshevik Government, when there will be a Government hav- 
ing the confidence of the people at large and able to work for the future 
regeneration of Russia. 

17 



J. Okulitch 

Representative Plenipotentiary of the Siberian Creameries Associations. 

With reference to the decision of the Supreme Council, there are two 
questions which I should like to take up : First, concerning the position 
taken by the Co-operative societies in Soviet Russia and, second, the 
question of possible importation of goods into Russia at this time. 

In March, 1918, at Omsk, I had a talk with the Bolshevik Commis- 
saire of Food Supplies, Schlichter, concerning the relations then ex- 
isting between the Bolshevik Government and the Co-operative Societies. 
Schlitchter told me quite definitely that the Bolshevik Government 
proposed to do away with all the co-operative organizations as repre- 
senting the wealthy part of the rural population, and that the Govern- 
ment wanted to organize special communal food supplies. The Bol- 
shevik then began in 1918 the realization of this plan but could not ac- 
complish it, having been driven out of Siberia by the Siberian anti-Bol- 
shevik forces. I know that the Moscow Co-operative Bank has en- 
tirely lost its independence and that it was merged into the Bolshevik 
State Bank. I also know that the Bolsheviki have introduced their 
representatives into all the other co-operative organizations for their 
control, thus we cannot consider that the co-operative organizations 
are separate from the Bolsheviki organization. Thus when Mr. Berk- 
enheim, the representative of the Moscow Central Union, one of the 
largest consumers co-operative societies, negotiated with the representa- 
tives of the English Government, he certainly had to base his plans on 
the friendly approbation of Lenine and Trotsky. 

The fact that the Government of Lenine has ref^ised to admit Eng- 
lish steamers with goods belonging to the Co-operative societies into 
Soviet Russia is another proof that the representatives of Co-opera- 
tive societies in Russia have no freedom of action. 

Turning now to the other side of the matter, Messrs. Berkenheim 
and Company are quite sure that they can establish commercial rela- 
tions and that they will export to western Europe many agricultural 
products and will thus help to lower the prices on these products in 
European countries. 

But there is nothing to export, except, possibly, grain. However, we 
know that in 1917 Russia had great difficulty in feeding her army and 
her cities, especially in the north. We know that all the efforts of the 
Department of Agriculture and the Zemstvo organizations did not lead 
to any successful results. We also know that the Russian Govern- 

18 



merit could not fulfil its promise of sending wheat to France on account 
of these difficulties. Finally, we know that at present not only the 
northern cities but even some of the rural districts of Central Russia 
are suffering from starvation and we know that all forms of transporta- 
tion, and especially the railroads, have utterly broken down. 

Commercial relations or barter with Western Europe are not pos- 
sible at present, and how is it possible to speak of export of food sup- 
plies out of Russia when part of her population is dying from starvation ? 
For the organization of regular commercial transactions we must have 
entirely different political, social and economic surroundings. As long 
as there exists in the country a financial prostration, a lack of regular 
system of currency in financial or economic plan, no credit whatever and 
absolute absence of law and order, we cannot build up any sound com- 
mercial relations. The latter will be impossible as long as the Bolshe- 
viki disorder and disorganization continues in the country. 

St. Louis, January 30, 1920 



19 



A. Berkenheim 

President, Foreign Board of the Russian Co-operative Union. 

In February, 1919, we laid before the British Foreign Office, and 
also before the secretary of Premier Lloyd George, our plan for the 
exchange of Russian raw material for manufactured goods from allied 
countries. C. Krovopouskoff and myself were summoned last week 
before the Supreme Council, where the plan was adopted. 

We require farming and agricultural implements, cloth, shoes, 
locomotives, motors, automobiles and medical supplies. Ship tonnage 
must be furnished by the Allies, as Russia's shipping has completely 
disappeared. Ships may enter Black, Baltic and White sea ports 
loaded with goods needed by Russia and may return with our 
exports. 

Imports will come to Russia consigned to us. They will be dis- 
tributed to our stores throughout the country, and we will purchase 
grain and cereals from peasants, paying them in rubles at a fixed 
rate. We will also give them scrip entitling them to purchase from 
our stores imported goods for the identical amount of rubles we paid 
them when they were selling their own stocks. All dealings must 
be done through our Co-operative Societies. 

Our stores are not under the control of the Bolsheviki. When 
the Moscow government nationalized all stores and closed them, our 
stores continued business undisturbed. This was not through any 
undue friendship with the de facto government, but because of the 
high esteem in which the Co-operative Societies^ are held by the 
population throughout Russia. We feel sure our headquarters in 
Moscow can reach a satisfactory agreement with the Soviet authorities 
for impartial distribution. — Associated Press Dispatch, dated Paris, 
January 19, 1920. 



20 



M. Litvinoff 

Soviet Representative at Copenhagen. 

M. Litvinoff, the Soviet representative, said that he had not yet 
been approached concerning the Supreme Council's decision to raise 
the blockade, but that he was ready to negotiate if approached. 

Should his government agree to the suggested exchange, he added, 
it must be through new representatives of the Co-operative Societies, 
and not through a few of the former representatives in London and 
Paris, who, he declared, were counter-revolutionaries. 

Litvinoff had no knowledge of the Soviet Government's intentions, 
but believed that it would be favorable to the proposition. — N. Y. 
Times, January 20, 1920. 

Maxim Litvinoff, the Russian Bolshevist representative, conferring 
here with James O'Grady, British delegate, regarding an exchange of 
prisoners and interned civilians, is much gratified by the announcement 
from the Supreme Council in Paris that trade relations will be opened 
between the Allies and the people of Soviet Russia. He considers the 
action of the Council tantamount to raising the blockade, and says it 
will have an enormous effect on the economic situation in Russia. 

Russia has great stocks of goods for export, especially flax, hemp, 
timber, bristles, hides, furs and platinum, he says, and particularly 
needs machinery, agricultural implements and railway materials. He 
declares there is plenty of food in Siberia and other sections, but there 
is a lack of transportation facilities. He urges that it will be neces- 
sary to allow Russia to send representatives abroad if trade with the 
outside world is to be a reality, and declares Soviet Russia will freely 
admit commercial and other representatives on a reciprocal basis. — 
A^. y. Times dispatch, dated Copenhagen, January 18, 1920. 



Commercial Department of the Rus- 
sian Soviet Government Bureau 

{Statement) 

The recent decision of the Supreme Council at Paris regarding 
Russia has created more or less fantastic speculations as to the pos- 
sibility of the re-establishment of trade relations with Russia by dealing 
with Russian "Co-operative Societies" only, but in other respects "not 
changing the policy of the Allies toward Soviet Russia." It therefore 
seems necessary to call the attention of American manufacturers and 
exporters to certain obvious facts. 

21 



The resumption of trade relations with Russia entails problems 
such as the re-establishment of Russia's foreign credit, the matter of 
transportation, of harbor facilities, of representatives abroad to take 
care of the clearance of ships and of other matters of consular nature, 
the issuance of passports for commercial travelers back and forth, the 
mutual protection of foreign visitors in Russia and Russian visitors 
abroad, etc. These questions cannot be solved without formal contact 
with the authorities in Russia. 

There exists in Russia no such Co-operative societies as contemplated 
in the press. Under the present conditions in Russia the formerly 
independent Co-operative societies have changed their nature and their 
functions. They are today distributing agencies of the Russian 
economic system, and they work in complete harmony with the Soviet 
Government. So-called "representatives of Russian Co-operative So- 
cieties" in London, Paris and New York do not represent the 
Russian Co-operatives, and have no authority whatsoever to speak in 
their name or to enter into any obligations on behalf of any number 
of people in Russia. They do not represent anybody except them- 
selves. They have no supplies in Soviet Russia, and have no right 
to negotiate obligations in anybody's name except their own. 

The foreign trade of Russia is nationalized and the Russian Gov- 
ernment is in full control of all supplies in Russia, of the means of 
transportation, and of such other resources which can be made a 
solid basis for Russia's foreign credit. 

New York, January 23, 1920. 



Santeri Nuorteva 

Representing L. C. A. C. Martens, Bolshevist Agent in the 
United States. 

The raising of the blockade is only the first step. The doors are 
being opened. 

It is significant that the despatch about the lifting of the blockade 
includes also neutral countries. That means the following: 

For the last six or seven months England sent enormous quantities 
of goods to the Scandinavian countries. She is, of course, interested 
to have those goods shipped into Russia before other countries. They 
put it all over the American capitalists. 

Another important point is that trade with Russia will be con- 
ducted through Co-operatives. This does not embarrass us. Co- 

22 * 



operatives in Russia are working under the supervision of the Soviet 
Government. Co-operatives are a part of the distributive machinery 
of Soviet Russia. Somebody's prestige had to be kept up, as you may 
put it. But we are indifferent to formalities. The main thing for 
us is that the population of Russia will be able to renew economic 
exchange with other countries, and the population of Russia is sup- 
porting the Soviet regime. 

The partial lifting of the blockade is only the .first step. We are 
confident in the near future the blockade will be lifted altogether. 



Constantin Krovopouskov 

Mernber of Foreign Board, Russian Co-operative Union. 

This question was put to Constantin Krovopouskov, one of the 
co-operative representatives in Paris, by a representative of the New 
York Times : 

"Is it true, or is it not true, that the Co-operatives are under con- 
trol of the Soviet Government?" 

His reply was: "It is true. In each of our Co-operatives there 
is a Government Commissaire." 

Then the following question was asked: 

"Is it not a fact that the whole situation hinges on whether or not 
the Soviet Government is disposed to authorize importation and 
exportation by the Co-operatives, and whether it will facilitate this 



commerce r 



?" 



"That is a fact," he answered. — N. Y. Times, January 25, 1920. 



C. Morosoff 

General Manager, London Division of "Zakupsbyt." 

We have no gold, but we have what is better than gold — raw 
materials. 

It is impossible to say what plan will be worked out in Paris, but 
since we have the things the rest of the world wants, and we need 
virtually everything the other world markets have to offer, it is certain 
that a workable system by which the dealings can be accomplished 
will be evolved. We are hopeful of finding a means of obviating the 
seeming necessity of resorting to the elementary scheme of bartering, 
which is so primitive and unwieldy and which inevitably would result 
in great losses to all concerned in its operation. 

The bulk of the accumulation of grain, flax and other commodities 
is in central and southern Russia, which is a favorable circumstance, 
since Black Sea shipping is not attended by the many difficulties which 
would have to be overcome should trading be resumed through the 
Baltic ports alone. 

23 



Dr. I. J. Sherman 

Director, New York Branch, Moscow Norodny Bank. 

After several years of effort it seems that the Allies have recognized 
that the Co-operatives are a strictly non-partisan and non-political 
and strictly an economic organization. They have concluded evi- 
dently that we are a people's organization; that no question of 
profiteering or speculation can arise in connection with our business, 
for the profits are distributed among the members. They seem to 
have recognized the fact that the Co-operative institutions are the 
only organizations in Russia which have survived the general ele- 
mentary devastation, and that they possess the machinery for collecting 
the raw materials and for distributing supplies. 

The Co-operatives consist of 65,000 local societies, and are of three 
kinds, consumers' societies, producers' associations, and credit unions. 
A conservative estimate of the membership would be 20,000,000 
householders, affecting the lives of 65,000,000 persons. 

During the time when the Co-operatives were unable to do busi- 
ness they considered it their most important duty to collect raw 
materials, and at the present time they have considerable stocks of raw 
materials. In addition there are considerable funds at our disposal, 
and as soon as the necessary arrangements can be made we intend to 
resume shipments to various parts of the world. 

We have been buying goods for those parts of Russia, such as 
Siberia, South Russia and Archangel, that have been accessible. We 
have sent much in the way of manufactured articles to those points. 
We have nothing in common with any Russian Government or com- 
mercial agents in the United States. 

While there are immense stores of raw materials ready for export 
from Russia, yet the Russians, as well as the people of other European 
countries, cannot pay for their machinery and manufactured goods 
fully in raw materials. For this reason a system of credits and 
banking arrangements must be made to facilitate trade. 

The central organizations likely to play a leading part in trade 
from now on, because of the announcements, are the Moscow Norodny 
Bank, the All-Russian Central Union of Consumers' Societies, the 
All-Russian Purchasing Union of Agricultural Co-operators, and the 
Central Flax Growers' Association. 

The consumers begin with the local societies in the small towns. 
These organizations belong to a district union of a particular com- 
modity. After the district unions come the provincial organizations, 
and then the all-Russian organizations, each one of which includes all 

24 



the smaller societies in that particular line. The flax growers have 
their organization, as well as those dealing in hemp, butter, eggs and 
other things. The financial center of the movement is the Moscow 
Norodnv Bank, which acts as a clearing house. The Co-operatives 
have established representation in New York, London, Shanghai, Kobe, 
Helsingfors, Paris, Stockholm, Christiania, Genoa, Marseilles, Prague 
and manv other cities. — Journal of Cominerce, January 19, 1920. 



Alexander Zelenko 

Secretary of the A?nerican Committee of the Russian Co-operative 

Union. 

In Archangel and Black Sea ports there is enough raw material . 
on hand to pay all the credit needed by the Co-operatives. Last year 
the Co-operatives operated over 500 industrial plants and had a total 
of over 50,000 employes. The importance of the Co-operative so- 
cieties as a means of restoring normal conditions in Russia and of 
re-establishing trade conditions with the outside world can hardly be 
overestimated. 

The entire problem of economic interchange between Russia and 
America may be reduced to three main channels — increase of agri- 
cultural efficiency, importation into Russia of finished manufactured 
products, and credit for commercial and industrial expansion. In all 
three branches of this interchange America is the most welcomed 
country, because the Russian people expect from America fair treat- 
ment and open competition entirely free from hidden desires for ex- 
ploitation of territorial or political rights. 

Russia needs financial credit in order to foster this trade exchange, 
needs industrial credit not only to restore her industries but to start 
new branches of industry on the half-product basis, and needs many 
technically trained men to introduce modern methods in all branches 
of economic work. After-war conditions have made the need for 
long-term credit more imperative than ever. 

There has been no possibility of transporting and no willingness 
on the part of the people to exchange goods for paper money. Large 
stocks of butter and flax aggregating millions of pounds have accumu- 
lated, and as the hunting of fur-bearing animals has practically been 
at a standstill during the period because of lack of powder and shot, 
there is a vast amount of furs to be collected. 

The co-operatives unite 20,000,000 members and serve a popula- 
tion of approximately 100,000,000. They hold themselves strictly 
aloof from politics, and have carried on their activities with remark- 
ably little interruption, all things considered, from the beginning of 
the war. They still conduct their long chain of stores, and these are 
the centres for distributing and collecting raw materials. — N. Y. 
Times, January 19, 1920. 

25 



Herbert Hoover 



I have advocated ever since last Winter that the blockade on 
Soviet Russia should be removed on everything except arms and 
munitions, not because it would do the Bolshevist tyranny in Russia 
any good, but because I believe the removal of the blockade will 
take from under them one of their greatest props. For the last year 
they have laid every failure of socialism onto the blockade. They 
daily and hourly blamed the allied blockade for the shortage of food, 
clothing, and agricultural implements, and the misery that has arisen 
therefrom, and they have succeeded in impressing this upon an ig- 
norant people. They have also used it as a stimulus to raise armies 
under the contention that they are fighting to save themselves from 
starvation. 

These shortages and this suffering is not due to the blockade, but 
is due to the total industrial demoralization and bankruptcy in pro- 
duction, which will continue as long as socialism and the Bolshevist 
rule lasts. If the blockade is opened, the Bolshevist Government must 
secure the import of food and clothing at once, and thereby great 
suffering will be mitigated. 

The acute starvation is in the larger cities. These will be the 
areas that must receive imported food. The peasants have food 
enough at home. But, after a few months, when they have exhausted 
the $50,000,000 or $75,000,000 in gold and securitiies which they have 
remaining from the amounts they have stolen from the banks, then 
they will need to export commodities in exchange for inward goods. 
No one is going to give them credit. They have no commodities to 
export without causing further suffering to their people. They can- 
not export wheat when the population is hungry, nor cotton or flax 
when they are in rags. Their imports will then automatically cease. 

The greatest blow they can receive is to have such an exposure of 
the complete ■ foolishness of their industrial sj^stem to their people. 
Moreover, a lifting of the blockade will allow the real truth oi the 
horror of Bolshevist rule to come out of Russia. 

There is one thing that needs to be guarded against in the United 

States. Our frontier and port oflficers must redouble their vigor 

against the export to us of Bolshevist agents, propaganda, and money 
for subsidizing criminals to create revolution. 

The Bolsheviki also ought to be called upon to recognize the 
frontier of Poland and Russia as settled by the Peace Conference, and 
to cease fighting on that zone. — N. Y. Ti?nes, January 18, 1920. 



26 



Dr. E. E. Pratt 



Fo7-nur Chief of the U. S. Bureau of Foreign and Domestic 
Connnerce. 

From my point of view there are three facts of outstanding import- 
ance in connection with trade with Russia at the present moment: 

First, the problem of Russia is so important that it is essential 
for the United States to develop a constructive policv toward Russia, 
wise in its decision and comprehensive in its scope, which will be of 
benefit to American business interests and to the Russian people. 

Second, if it is possible to develop unrestricted and independent busi- 
ness transactions with individual firms in Russia and with the Russian 
Co-operative Societies without any direct dealings with the Soviet 
Government, such transactions would be of definite assistance ; and I 
agree with Mr. Hoover that such business relations would tend to 
restore normal conditions in Russia. Unless this degree of independ- 
ence of the Soviet Government could be attained, I should think that 
any such policj'' would then be futile. 

Third, the establishment of any trade between the United States 
and individual firms or with the Co-operative Societies in Russia 
must be on a barter basis. This is true because any transactions 
based on the payment in gold by the Soviet Government involves the 
question of the legality of such payments. It is a question whether 
or not sny American firm would be willing to accept direct trade 
relationships with the Soviet Government or its representatives in 
view of the fact that such American firms, by accepting gold as pay- 
ment, would be in the 'position of receivers of stolen property. 

I believe that the restoration of Russia as a free and' independent 
State under a liberal and democratic government, is of vital impor- 
tance both from the standpoint of the general international, situation 
and also from the view point of the permanent extension of American 
industrial and commercial interests.- — A", Y. Times, January 27, 1920. 
1920. 



27 



American Defense Society 

If we are a nation of dollar chasers, willing to sacrifice honor and 
the safety of the world for the sake of profitable trade with the Bol- 
sheviki of Soviet Russia, then the so-called American Commercial 
Association to Promote Russian Trade should be allowed without 
protest to continue its sordid campaign. We urge you to patriotically 
resist the pressure that is being made upon the American Government 
by those business houses who recently met in Washington to induce 
the Government to consent to an exchange of goods that would mean 
physical, moral and vital aid to the enemies of civilization. America 
wants none of the crime-tainted money of Lenine and Trotzky. 



28 



New York Times 

{Editorial January 18, 1920.) 

The Russian blockade is lifted; Mr. Lloyd George, having failed to 
kill the wolf, now offers him a juicy bone. For the first time in its 
history the British Empire has adopted the policy of buying off a 
dangerous enemj' — a policy which, to be sure, was successfully em- 
ployed on occasion by famous empires of the past, but which is as 
unlikely to bring permanent and satisfactory peace at this time as it is 
inconsistent Avith the habit of British foreign policy. To be sure, the 
surrender is veiled by the solemn assurance that we are reopening 
trade, not with the Bolsheviki, but with the Russian co-operatives, 
and that our policy toward the Soviet Government remains the same. 
But nothing can be sent into Russia without coming into the posses- 
sion of the Soviet Government if that Government wants it; what- 
ever the position of the Russian co-operatives, the party which con- 
trols the seaports, the railroads, the army, the factories, will be able 
to take and use everything that is sent in. And to say that the ship- 
ment of supplies of all sorts to a Government hitherto our enemy 
involves no change of policy, is so ridiculous that the Supreme Council 
can hardly have hoped that an5'body would believe it. 

The lifting of the blockade must mean the early conclusion of for- 
mal peace. Otherwise we should have the continuation of a state of 
war in which one side supplies the othef side with anything it may 
need. England could hardly remain in nominal alliance with Poland 
and Rumania and furnish the Bolsheviki with material to be used 
in the war against Poland and Rumania. It has been said that peace 
would bring a speedy change in Russia ; that without a war to evoke 
some support from national feeling the Bolsheviki would soon be 
ousted by Russian moderates, or be compelled themselves to become 
so moderate as to be unrecognizable. War, it has been argued, only 
strengthens Bolshevism; peace must mean its downfall. It is some- 
what surprising that this argument is presented most loudly by those 
who do not want to see the downfall of Bolshevism, who are the 
friends and apologists of Lenine's regime. Nevertheless, there is more 
hope of a collapse or metamorphosis of Bolshevism in a full state of 
peace than in a state of war where we send supplies to our enemies. 
The announcement made on New Year's Eve by the Bolshevist wire- 
less service that the collapse of Kolchak and Denikin meant Soviet 
governments in Berlin, Paris, Rome, and Washington before another 
year was somewhat too enthusiastic as a political prophecy, 57et quite 
accurate as an index of Bolshevist policy. Peace is only another form 
of war. Under the leadership of Mr. Lloyd George, the Allies are 
going to try it. 

29 



But this is not the only factor. Bolshevist industry is reviving 
under the direction of George Krassin, before the war Russian repre- 
sentative of the Siemens-Halske interests of Berlin. That is to say, 
Germany has the inside track in the race for commercial domination 
of Russia. Mr. Lloyd George or his supporters may have been in- 
spired in part by the fantastic hope of outstripping the Germans, if 
they can start now. The Germans have more than the inside track — 
they have an enormous number of business men who know Russia 
and are known in Russia, while the British have very few. On the 
commercial side, it is to be feared that Mr. Lloyd George's mountain 
will give birth to a somewhat ridiculous mouse. 



Philadelphia Pubhc Ledger 

- {Editorial January 20, 1920.) 

The supreme Council in Paris has just launched a new trade policy 
toward Russia. It was launched while the shock of an explosion, 
revealing a wide difference of opinion in British Government circles as 
to what the proper Russian policy is, was still reverberating through 
the air. It is clear enough that the Churchill group wants to fight 
the Bolshevists, believing that it is impossible to make peace with a 
raving wild beast. The Lloyd George group wonts to fight them, 
too, but believes that their grip on the helpless Russian people could 
be broken if food, medicines, machinery and supplies generally were 
distributed throughout Russia by an agency independent of the Mos- 
cow Government. They expect to find such an agency in the Co- 
operative Societies of Russia. 

The truth is that nothing could be more absurd and yet full of 
possible tragedy than the attitude of civilization toward Russian 
Bolshevism. We vvill not make peace with the Bolshevist Govern- 
ment, and yet we will not make war on it. As we refuse the Bol- 
shevists peace, they must fight us whether they want to or not; but, as 
we refuse to fight them, we present them with the easy victory of a 
one-sided conflict, except for such feeble local resistance as we can 
stir up among the Russian anti-Bolshevists, the menaced Poles, the 
threatened Rumanians and the dubious Baltic States. 

Yes, the Russian problem is vitally interesting to every civilized 
nation. Belligerent Bolshevism in Russia means that carrying of the 
war into every American city, means a constant example before the 
discontented everywhere of the possibility of a purely proletarian 
government, means a way out for Germany, means a grave menace 
of bankruptcy for most of Europe if Germany does not pay, means a 
constant threat of the most appalling possibility in history — the stir- 
ring up and letting loose on a hopelessly outnumbered world of a 
fanatic Asia, newly converted to the contagious gospel of Lenine. 

30 



New York Tribune 

{Editorial January 20, 1920.) 

Mr. Hoover says, the removal of the blockade against "Red" Russia 
has knocked one of their greatest props from under the Bolsheviki. 

Thousands hope that events will show Mr. Hoover to be right; 
but the same thousands fear he will be shown to be wrong. Those 
who sympathize with the Bolsheviki have not noticeably shouted for 
a continuance of the blockade. If they had believed in any genuine 
way that the suspension would "knock the props" from under the 
Bolsheviki would they have favored suspension? Would Lenine and 
Trotzky have begged for a suspension if they thought it would send 
them into exile and end their system? 

Scarcely. Over against the opinion of Mr. Hoover, then, are to 
be placed the opinions of Bolshevist leaders and sympathizers. Mr. 
Hoover has high repute as an expert, but, of course, he makes no 
claim to infallibility, and the weight of expert judgment seems against 
his conclusion. One may imagine, when the news came, that Lenine 
grinned in a way he would not have done if he thought a victory had 
been gained over him. 

No particular good is likely to come from indulging in rose dreams. 
Some 300,000 Bolshevists, organized into a party which is responsive 
to the orders of its executive committee, have possession of practically 
all the machine guns and munition factories of Russia. Of course, the 
unarmed cannot stand against them. In Czar days a similar minority 
bossed Russia by the use df an army. If the World War had not 
compelled the Czar to "water" his army by conscription he would 
still be autocrat. Lenine saw clearly how to control Russia. He 
dismissed the civilian army and organized one composed of profes- 
sionals. He is now willing to have a breathing spell to consolidate 
his power, but has no intention of giving Russia free institutions. He 
will countenance no election whose result he cannot control, and the 
imperialism he has set up will act as imperialisms always do. 

Inasmuch as the withdrawal of military aid was followed by a lift- 
ing of the blockade, it may be predicted that the lifting of the block- 
ade will be followed by "recognition." When "recognition" comes 
let us hope the world will be honest — that it will not receive the 
ambassadors of a so-called Russian republic, but of Lenine I, Autocrat 
of All the Russias — a despot with power to make trouble if not kept 
in good humor. 

31 



New York World 

{Editorial] anuary 19, 1920.) 

As the Allied Powers have had no well-sustained policy toward 
Russia except that of non-intercourse, the statement b}' the Supreme 
Council that the lifting of the blockade does not mean a change in 
its attitude toward the Soviet Government must be accepted as one 
of the insincerities behind which baffled statesmen at times take 
refuge. 

The fact is that Western Europe has been as irresolute in the 
presence of the Red menace as, previous to acquiring unity of com- 
mand, it was unsuccessful in the field, and for the same reason. Mili- 
tarism has been shouting for a new war regardless of consequences, 
whereas Socialism of various shades has demanded fraternity on any 
terms. In all countries most people have recoiled as instinctively 
from another savage conflict as from the proposed embrace of the 
dictators of the proletariat. 

Trade with Russia is to be limited to the great Co-operative so- 
cieties. If that results in a quasi-recognition of the Red Government, 
so be it. The blockade has amounted to that all along. With com- 
mercial relations established even in part, the rule of outlawry must 
soon be confronted by conditions at home with which it will be pow- 
erless tO- deal. To tolerate it will be to encourage civilizing rela- 
tions that must prevail over savagery. To interfere will be an open 
confession of perfidy. 

In spite of the statement by the Supreme Council to the' con- 
trary, this is a new policy and it has been adopted because the old 
policy was a demonstrated failure. Success may not attend the ven- 
ture, but it will introduce a domestic problem into the councils of the 
commune not likely soon to be disposed of by falsehoods and force. 



32 



N. Y. Evening Post 

{Editorial, January 17, 1920.) 

Peace with Soviets. 

That is the obvious meaning of yesterday's action in the Supreme 
Council at Paris. The official statement which announces the decision 
to resume trade with "the Russian people" is at pains to affirm that 
the arrangement implies "no change in the policies of the Allied 
Governments towards the Soviet Government." But it must be re- 
called that the Allied Governments have never been technically at 
war with the Soviets. Allied troops M'ent into Russia to repay the 
debt they owed their Russian friends in the war with Germany and 
as part' of that struggle. When active Allied participation in the 
Russian civil war came to an end, their aid in money and materials 
continued as the redemption of a pledge of honor to their Russian 
friends. Now these friends have been swept out of existence by the 
Red armies, and the Allies are confronted with the accomplished fact 
of Soviet victory. This fact they can acknowledge, because they 
have paid their debt of honor to the anti-Soviet parties. 

We cannot tell now how far the co-operatives have, in some form 
of silent truce, been merged into the Soviet scheme of government. 
And so it is difficult at the present moment to say how far a recogni- 
tion of the co-operatives goes towards a recognition of Lenine, in 
fact if not in form. The initial gain in prestige is certainly on 
Lenine's side. But the Soviet problem is one that must be dealt 
with on the basis of hard facts and to the exclusion of considerations 
of sentiment. Lenine niay be welcome to his prestige if the Allied 
world can get into touch with the sane elements of the Russian people. 
With Russia open, Lenine is open to a searching examination of the 
actualities of Soviet rule. 

Physical communication between the Allies and the Russian people 
cannot help being intercourse in considerable measure with the Soviets. 
But the true Allied policy must remain one of moral non-intercourse 
with a system avowedly built upon minority domination and, by prin- 
ciple, at war with Western democracy. Lenine's victories in the field 
have been acknowledged. His rule in Russia cannot be acknowledged 
until the Russian people has been given the full opportunity to speak 
for itself. 



33 



Boston Eve. Transcript 

{Editorial January 19, 1920.) 

The lifting of the Russian blockade can only be interpreted as the 
prelude to the earh^ recognition b}^ the Allies of the Soviet Govern- 
ment. It marks the reversal of the policy of isolating by a barrier of 
non-intercourse the Bolshevist power from the rest of Europe; a policy 
to which the Allied governments had been long committed, in the hope 
that thereby they might escape from the peril of the Soviet bid for 
world empire. The opening of Russia to trade must soon be followed 
by an announcement of the cessation of the state of w^ar, and a recog- 
nition of the Soviet Government. The Allies cannot for long en- 
gage in trade with the people of a Government with which they 
profess to be at war. The processes of trade are incompatible with 
a condition of war. Nor can that fact be altered or disguised by 
a declaration that the raising of the blockade involves no change in 
the official attitude of the Allies toward the revolutionary Govern- 
ment of Russia. 

In effect, the decision of the Allies to allow trade with Russia is a 
surrender to Bolshevism. The Soviets are to be bought off with 
promise of financial profits to their merchants and traders. Only the 
course of time w\\\ prove how successful the capitulation to Sovietism 
will prove in the promotion of European peace. In the minds of the 
war chiefs of Britain and France, that surrender will free Europe 
neither from the rumor nor the fact of war. 



34 



Trading with Russia 

By JEROME LANDFIELD. 

{N. Y. Times, January 21, 1920.) 

What is the prospect of carrying on the proposed trade with the Russian 
people by dealing with the Co-operatives? In this matter, it must be noted first 
of all that while the Co-operatives include millions of Russian peasants, their 
management has been seriously interfered with by the Bolshevist Government 
and at the present time the local units are unable to conduct any enterprise 
outside of Russia, or even with the large cities, except in accordance with the 
will of the provincial Commissars. Secondly, any proposed trading is de- 
pendent entirely upon transportation, and the transportation facilities, so far 
as they exist, are entirely in the hands of the Soviet Government. Thirdly, 
it is inconceivable that the Soviet Government will permit operations to take 
a form that would work against them politically. Fourthly, the peasants 
in the country districts are not in need of food, but of manufactured articles, 
while the Bolshevist Government itself is in possession of such stores of raw 
materials as might be available for exchange. It is therefore the Bolshevist 
Government that would utilize the goods imported, for the purpose of securing 
food supplies for the cities from the country districts. 

The question of payment immediately arises. The statement alludes to the 
exchange for grain, flax, &c. The Bolsheviki themselves have frequently as- 
serted that the}' were prepared to pay gold to the extent of $200,000,000. Let 
us consider the latter proposal. Some $500,000,000 of the Russian gold reserve 
is accounted ' for by the payments made to Germany under the Brest-Litovsk 
treaty and by the amount seized by the Russians and Czechoslovaks at Kazan. 
Of the balance in their possession, $125,000,000 is the Rumanian gold reserve, 
which was removed to Moscow for safekeeping when Rumania was invaded 
by the Germans. If the Bolshevist Government undertakes to expend this 
Rumanian gold, the Allies can scarcely recognize such transactions as legiti- 
mate. On the other hand, the remaining gold is State property and therefore, 
if the Allies legalize the use of this gold, in this wa}' it becomes- a technical 
recognition of the Soviet Government, and if they do not permit it, then those 
who accept it become receivers of stolen property and run the risk of future 
litigation. 

As for the exchange of raw materials, the practical difficulties are very 
great. Even under the governments of Kolchak and Denikin, in possession of 
the richest raw-material-producing regions, it was not found possible to export 
very much. That the Soviet Government, with its nationalization of trade, 
and its general confusion and disorganization, will be able to do better is not 
to be expected. It will not be well, therefore, for American business men to 
pin large hopes on the prospects of business resulting from the plan announced 
by the Supreme Council. 

It is well that the blockade should be lifted. As long as there were national 
Russian movements against the Bolshevist power, the blockade served its 
purpose in preventing the Bolsheviki from getting supplies with which to 
increase their military power. With the collapse of these national movements, 
thanks to the lack of the aid promised by the Allies, the significance of the 
blockade has disappeared. Whether it was ever an effective measure, and 
whether its advantages outweighed its disadvantages, is questioned by loyal 

35 



Russians themselves, and recently there was a strong movement among the 
anti-Bolshevist Russians in favor of lifting it. Although, as Mr. Hoover 
clearly points out, the blockade has not been responsible for starvation in 
Russia, a condition brought about entirely by the incompetence, graft, and 
crazy economic experiments of the Bolsheviki, great use of it has been made 
by Bolshevist sympathizers as a propaganda argument. The lifting of the 
blockade would show up quickly the failure of the Bolshevist system, and it 
would, at the same time, open the horrors of the Bolshevist regime to the 
eyes of the world at large. It is scarcely possible that the system of terror 
by which that regime is maintained could long continue in the light of pub- 
licity, and the moment the system of terror is abandoned the present Bol- 
shevist rulers must fall. It is possible, therefore, that the lifting of the block- 
ade would greatly hasten that internal revolution from which alone can come 
a proper cleansing of the Russian state. 

As regards the military danger to Europe and Asia presented by the Bol- 
shevist army and the aggressive militaristic aims of its leaders, the announce- 
ment of the Supreme Council changes nothing. The civilized world is at war 
with Bolshevism. The two systems and ideas cannot exist side by side. If 
they prevail, we succumb — there is no middle course. The Bolsheviki realize 
clearly that the class warfare which they have inaugurated is doomed unless 
they can bring about general revolution. If they make peace or compromise, 
it is but to obtain a breathing space in which to carry on their propaganda 
more effectively, and to resume the attack when the time is propitious. There 
are some foolish ones among us who seem to think that the Bolsheviki have 
seen the errors of their programme and have reformed, and that since they 
are in possession of Russia we should recognize them. But this is impossible. 
We cannot compound the felony. 

The greatest' danger in this warfare is that, through a blundering policy of 
setting on the little States that were formerly parts of the Russian Empire to 
fight our battles for us, we shall transform the struggle against Bolshevism 
into a war with Russia. This would be a catastrophe, since it would unite 
all the patriotic national elements in Russia on the side of the Bolsheviki, in 
spite of their present antipathy for them. Our correct policy is to announce 
to all the world, first, that we will not recognize the tyrannical Bolshevist 
minority or collaborate with it; secondly, that we stand firmly for the unity 
and independence of Russia; and, thirdly, .that we stand ready, to co-operate 
in every way with the sound and constructive elements in Russia for the 
restoration and regeneration of their country. 



36 



Lifting the Blockade 

By LEO PASVOLSKY. 

{Neiv York Times, January 25, 1920.) 

The blockade of Soviet Russia was one of the features incident to the con- 
duct of the civil war which has been raging in Russia for the last two years. 
Its lifting never could be considered as anything but another incident in the 
civil war. The blockade itself never was an important factor in the war, 
since the isolation of the Soviet regime was a direct and inevitable outcome 
of the betrayal by the Bolsheviki of the allied cause in making a premature 
peace with the Central Powers. But the circumstances under which the lift- 
ing of the blockade would and finally did come about are of vital importance. 

The action of the Supreme Council in Paris several days ago was expected 
to come at some time or other by all those who were watching closely Russian 
developments. But the circumstances under which this action came surpassed 
all the fears of even the most pessimistic. Accidentally or otherwise, the an- 
nouncement of the resumption of trade with Soviet Russia was made almost 
simultaneously with the decision of the Supreme Council to recognize the 
independence of the two republics in the Caucasus, namely, Georgia and the 
Tartar Republic, and at the same time the Baltic Provinces were already 
practically placed on the footing of independent States. 

This fact gives a tremendous political weapon into the hands of the Bol- 
shevist leaders. They can now come to the people of Russia and say to them 
that the Red military successes have made the Soviet regime such a formidable 
adversary for the Imperialists of Western Europe that the latter are willing 
to bow down to its power and agree to its insistent demand for the lifting of 
the blockade. At the same time the Bolsheviki can make use of the allied 
action in placing a stamp of approval upon several important cases of sepa- 
ratism in Russia. They can offer the Russian people another proof of the 
statement they have so often made in their propaganda that the Allies have 
in mind nothing but the weakening and the dismemberment of Russia. And 
this time, unfortunately, the claims which the Bolsheviki can make in this 
direction can be substantiated by what appears to be a definite policy. 

Had the lifting of the blockade been accompanied by a definite statement of 
policy on the part of the Supreme Council, acting for the allied nations, in 
which their friendship for the Russian people was presented clearly and in 
definite terms, then, perhaps, the present action would have had the same 
effect upon the people in Russia as the President's Fourteen Points and other 
declarations had upon the people of Germany during the war. Most probably 
the method of getting this information to the Russian people would have had 
to be the same, since the Bolshevist press of today is even less open to the 
publication of the truth about the outside world than was the German press 
during the war. As it is, the statement that the policy toward the Soviet 
Government remains unchanged merely means affirming the lack of policy 
toward Russia that has been the curse of the international life of the world for 
the last two years. And, when coupled with the other actions of the Allies 
toward Russia, it makes for a direct loss of what little moral prestige the 
Allies still have in Russia and means merely a blow for the anti-Bolshevist 
elements under the Soviet regime rather than an act of assistance. 

Z7 



As for the practical possibilities of the course adopted by the Supreme 
Council, there seems to be no doubt that it is merely a poor edition of the 
Nansen plan which was discussed so much last Spring. The Nansen project 
was the first attempt to lift the blockade of Russia by organizing trade with 
Soviet Russia, at that time, through the -agency of the neutral powers. It was 
on a semi-charity basis and was undoubtedly doomed to failure even before 
it could be applied in actual practice. At the time when the Nansen pian 
was under discussion, I had a long conversation with Mr. Nansen touching 
upon the different features of his plan. There were two difficulties in the 
carrying out of his plan which I pointed out to him and to which he could 
not find a satisfactory reply. 

The first difficulty was that of organizing the distribution in Central 
Russia. Mr. Nansen sought a parallel in the work of the Hoover commission 
in Belgium, and when I pointed out to him that there was a vital difference 
between the responsible military organization which the Germans maintained 
in Belgium under their occupation and the thoroughly inefficient and irre- 
sponsible organization of the Soviet regime, Mr. Nansen replied that he real- 
ized that, but that he was willing to take chances. The second difficulty was 
that of transportation, and I pointed out to Mr. Nansen that in order to carry 
out his plan in all its details he would probably have to put on its feet the 
whole Russian system of railroad transportation; which he also admitted was 
true. And when I finally pressed him for an answer to the question as to 
whether he would not in this way merely solve the two most difficult prob- 
lems that the Bolshevist regime is facing, viz., feed the cities and reconstruct 
transportation, he replied that, even if this were so, he was primarily ii.. 
terested in feeding the starving population of the Russian cities. 

The carrying out of the plan adopted by the Supreme Council in Paris still 
involves the same difficulties and encounters new ones. The question of or- 
ganizing distribution in Russia remains the same. The talk of dealing 
through the Co-operative organizations when those organizations had been 
ground under heel by the Soviet regime is a case of camouflage at best. A 
Government grain monopoly still exists in Russia, and no one can purchase 
grain from the peasants except the Government. No one, therefore, under 
the Soviet regime, can gather from the peasants the grain needed for export 
out of Russia, no one can obtain that grain for transportation to the cities, 
except the Government. And if the Government is to bring the grain to the 
cities, its system of distribution would certainly not be different from the sys- 
tem followed out now ; the followers of the Bolshevist regime will still be 
fed, and everybody else will still starve, as now? The Supreme Council plan 
contemplates no charity features. It places everything on a business footing. 
And how can any business dealings be had on anything like a large scale, 
which the carrying out of the plan makes necessary, unless it be done with the 
Bolshevist Government itself? It appears, therefore, that the plan is really 
what the Bolshevist representatives already term it, a camouflaged decision 
to enter into direct communication with the Soviet Government. 

There is another feature which renders the present plan a very much 
worse edition of the Nansen plan. The statement, as issued by the Supreme 
Council, makes the central point of the plan not so much the importation of 
goods into Russia as the export of foodstuffs from Russia. The Nansen plan 
at least spoke only of feeding Russia. 

One gets a peculiar sense of similarity between the conditions under which 
the Germans concluded the treaty of Brest-Litovsk and the conditions under 
which the Supreme Council has now lifted the blockade of Russia. In both 
cases the avowed object of making peace with the Soviet regime in Russia 
was an attempt to get foodstuffs and raw materials out of the country. There 
are grave dangers in the possibilities of this similarit}'. 

38 



The dangers of the blockade itself and its effect upon the conditions in 
Russia were always misunderstood in this country, as well as elsewhere. The 
rural population in Central Russia never starved, except when the Bolshevist 
requisitions robbed the peasants &f all of their available grain. The cities 
were starving, but the reason for that was that Central Russia never could 
support itself from the point of view of food. It always had to bring food 
from South Russia and Siberia. The real causes of starvation in the north 
lay, in the first place, in the fact that the civil war had rendered those sources 
of food supply inaccessible, and, in the second, because even when the for- 
tunes of war did bring those districts temporarily into- the hands of the 
Bolsheviki, the disorganized transportation facilities made it impossible to 
transport grain into the starving portions of Russia. The Supreme Council 
in Paris has no foodstuffs to send to the starving cities of Russia. At best it 
can feed only the port cities. 

But even that is not so important. Persons returning from Soviet Russia 
bear witness to the fact that in Russia itself, in the starving cities, the ques- 
tion of blockade never meant anything. It was merely a weapon, a political 
weapon in the hands of the Bolsheviki in precisely the same way that it was 
an instrument for pro-Bolshevist propaganda outside . of Russia itself, par- 
ticularly in England and America. And since this was so the circumstances 
under which the blockade has been lifted merely make it a still more powerful 
instrument and a still more important tool for propaganda in the hands of the 
Bolsheviki in Russia and their agents abroad. 

The whole action of the Supreme Council in lifting the blockade and the 
condition under which this action was performed constitute the crowning 
blunder of the whole allied policy of blunders in their relations with Russia. 
It is fortunate, indeed, that America had no direct part in this latest and 
crowning blunder of the Allies. The decision to life the blockade was ap- 
parently taken without consulting America. Let us hope that this fact will be 
clearly understood in time by the people in Russia whose struggle for liberation 
— blockade or no blockade — will not be over until the Bolshevist tyranny is 
overthrown and a democratic republic is established, when the people of Rus- 
sia will be able at last to look backward, calmly and dispassionately, and de- 
termine for themselves who were their real friends in Russia's darkest hour. 




39 



>,^ 



An Answer to Mr. Berkenhemn 

By Dr. Kasimir Kovalsky 

Member of the American Committee of Siberian Agricultural 
Co-operative Unious. 

The lifting of the blockade, in accordance with the plans urged by 
Mr. Alexander Berkenheim, makes the Co-operative organizations the 
instrument of possible commerce. In connection with this, the follow- 
ing considerations are important: 

Mr. Berkenheim's plan of supplying Russia with foreign goods 
through the Cooperative Societies is the purest kind of Utopia. 

True, the Russian Co-operatives are a great power. But that power 
could give the full measure of its useful work to the population only 
in the case when, on the one hand, the Co-operatives were able to 
replace the whole of the trade and supply apparatus of the Soviets, 
and, on the other hand, to gain control of the Russian transportation 
system. Of course, the Soviets will never allow that, as it would 
mean the complete reversal of Trotzky's and Lenine's tactics. 

Now, regarding the export of the Russian raw materials: It 
would be a good thing first for the Russian Co-operatives to ask the 
Russian peasant what are his views on the export question, and what 
has he actually to export. Cattle? It would be a crime to export 
cattle from Russia at present. All the provinces of northern and 
northwestern Russia, the northern part of Siberia, as well as the 
large prairie (steppe) provinces, have lost during the great war and 
after, during the civil war, close to fifty-two per cent of their horses 
and milk cattle. The epidemic diseases of the cattle in the Kirgiz, 
Orenburg and Ural steppes, in the years 1918 and 1919, have also 
destroyed many million head of cattle. 

Will Mr. Berkenheim deprive the population of what is left of their 
horses and cattle for the sake of export? 

Further, regarding grain : There are, in fact, in Siberia, on t' 
Ural and in South Russia, millions (but hardly billions) of p' 
of grain (36 lbs. to the pood). Before thinking of supplying f*" 
countries with that grain the Co-operatives should in honor thi- 
of that enormous part of Russia which is at present slowly 
on one-quarter and one-eighth of a pound of adulterated b 
day per person. 

Of course, it is possible to organize the export of Ry' 
but only with the consent of the peasants themselves, ^/ 
unhampered assistance of the local Zemstvos and city ijy 
bodies of local self-government re-established in their ri' 

The right of local self-government is the first articlf 
of the Russian socialistic parties. Has Mr. ' Ber' 
those principles? 



i,nS.'!^."Y °^ CONGRESS 

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028 031 252 6 



Finally, about flax : It is a pleasure to see Mr. Berkenheim's 
effort to supply the English factories with flax, yet Russia herself 
is clothed in the last rags of her cotton and flax textiles. Who will 
attend to Russia's need in flax? 

Production in Russia has fallen to ' the minimum. It seems then 
that instead of keeping what little we have of flax for future produc- 
tion we are to send it abroad. And what if the peasant is not going 
to give the flax? In that case it will be necessary to send for it — 
the Red Army, with machine guns and horsewhips. The Russian 
Co-operatives have never stooped to such practices, and never will. 

Mr. Berkenheim's plan is Utopia. Mr. Berkenheim has not even 
given himself the trouble to think that transportation at present in 
Russia, torn by civil war and starvation and infested by numerous 
bandit bands of various descriptions, can be effected only under the 
threat and protection of the bayonets oi the Red Army. 

Economics are too closely connected with politics, and until "poli- 
tics" in Russia have assumed the form of lawfulness, order and civil 
peace the plans of Berkenheims will result only in the further im- 
poverishment of the population and the fanning of the flames of 
civil war. 

Again, if the Co-operatives are so powerful in Russia and Russia 
itself is so immensely rich in everything, why is it that both Co- 
operatives and non-Co-operativcs are starving in Soviet territories, 
and the peasants, in order to get an extra pound of potatoes from 
their own fields, have to go out at night and steal for themselves 
some potatoes, with the rifle in their hands? 

New York, January 21, 1920. 



Litvinoff Appointed Head of 
Russian Co-operatives 

i^im Litvinoff has been named Chief Director of 

ssian Co-operatives. Litvinoff, as official represent- 

the Soviet Government, has been conducting ne- 

'^ with James O' Grady, British representative in 

^n. It will be difficult, then, to trade with the 

ts directed by Litvinoff without treating with 

vernment, of which Litvinoff is the official 

^^or/^ Times, February 9, 1920. 



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LIBRARY OF CONGRESS 



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